Chinese cars

BYD

Australian car buyers could have 10 new brands to choose from within two years with more than a dozen Chinese vehicle manufacturers working on an Australian export program.

The influx of unknown Chinese brandsis unprecedented in number but follows a trend forged by Japanese and Korean car makers to use the Australian market as a test bed for western tastes, before tackling the giant US and European markets.

Most Chinese cars headed to Australia are likely to be small cars or four-wheel-drive-style wagons - two of the most popular new-car segments - but they have the potential to change the dynamic of the new-car market.

"The Chinese manufacturers are growing in capability every day and history tells you that if you underestimate the Japanese or the Koreans you pay the price."

China is now the world's biggest consumer of new cars, beating the US market in 2009 by buying more than $13 million new cars. There are more than 40 new-car brands.

Great Wall Motors was the first Chinese brand to arrive here last year and will be followed this year by Chery, one of China's five big car makers. They're set to be joined soon after by the new owner of Volvo, Geely.

Others hoping to ship cars to Australia include unknowns such as Chana, Dongfeng, Zotye, Gonow, Roewe, Hawtai and BYD, the latter planning to topple Toyota by 2025 as the world's biggest car maker. One, Lifan, is even looking at assembling cars in Australia.

"It may make more sense economically to assemble the cars in Australia than just import them," Lifan assistant general Igor Tan told Drive.

All up more than 10 brands told Drive they either had firm plans or were canvassing export partners with a view to selling cars here by 2012.

The managing director of Ateco, already importing two Chinese brands and looking at more, says the imminent influx isn't a surprise.

"It's an invaluable test market if you want to sell in Europe or North America," said Ric Hull. "It will probably push the Koreans [car makers] upmarket, who in turn will keep pushing the Japanese further upmarket."

Like it's done with consumer electronics, the Chinese look set to lower prices, exerting pressure on the lower end of the market in much the same way Hyundai did in the 1990s.

"It will possibly have its major impact on the used-car market," said Hull. "People then face a very simple choice, do you buy a car with a three-year warranty behind it or do you buy a used car."

Pricing could be 10 or 20 per cent lower than other similar vehicles on the market - and with additional equipment.

"If the Koreans don't have alloy wheels, we'll do alloy wheels," said Dinnesh Chinnappa, Ateco's general manager of new ventures, talking about how the company's Chinese brands - Chery and Great Wall - will get traction.

Currently Chinese car makers are predominantly producing regular petrol- and diesel-engined vehicles, but many are investing hundreds of millions in electric and hybrid vehicles.

BYD is one of the world's largest battery producers and only started building cars in 2003; last year it produced almost half a million vehicles.

Australian importers have their eyes on some of the Chinese electric vehicles, with Ateco considering various options.

"We want to have an electric car in 2011," said Ateco's governing director Neville Crichton, signaling a target price of $25,000. "We're very confident we will."

The Chinese makers have been criticised for building cars with sub-standard safety and quality, but already it's improving exponentially.

"They know they have to learn, but they are quick learners," said GM's Wale. "We just have to be conscious that while they might stumble a few times and some will fall, at least some of them will learn from their mistakes and be successful in Australia."

Despite a disappointing two-star ANCAP rating for one of its utes last year, Great Wall recently scored four stars (out of five) for its X240 four-wheel-drive.

The vice president of Chery, Biren Zhou, said the company takes safety very seriously and will work to improve all aspects of its vehicles.

"We will make the improvement in the shortest period of time," said Zhou. "When the date [of the first Chery ANCAP crash test] is determined I think we need to arrange [to send] engineers to Australia."

Lifan's assistant general, Tan, said: "We want to improve our quality because we know the Australian market has really high expectations for quality.

10 comments so far

I welcome the move, as long as safety, quality and environmental standards are met. I can only see this benefit to consumers. Let's face it, paying something like $20,000+ for a small car is insanity

Commenter

Mr Wowtrousers

Location

ACT

Date and time

May 01, 2010, 10:25AM

FUGLY!

Commenter

Willard

Location

Central Coast

Date and time

May 01, 2010, 11:27AM

I live in Shanghai. A couple of years back, I bought a 125cc scooter made by Geely. It was cute-looking, but also gutless, loud and squeaky, with terrible brakes and suspension, high petrol consumption, and very poor rustproofing.

After a local thief recently did me an unexpected favour by purloining my scooter, I went out and bought another. Ostensibly the exact same model, my new bike is quiet, powerful, economical, handles and brakes well, and hasn't rusted. It's like chalk and cheese.

In two short years, Geely has learned how to make scooters. GM's Kevin Wale is right: the Chinese are quick learners. Don't underestimate them.

Commenter

tony p

Location

Shanghai

Date and time

May 01, 2010, 12:07PM

Ugly names those, why not memorable names we all have at the tips of our tongues? Names like the Tiannamen, or the Beef and Ginger or the Trial of Stern Hu?

Commenter

Tim

Location

Sunrise

Date and time

May 02, 2010, 7:35AM

OMG. They are UGLY CARS

Commenter

willard

Date and time

May 02, 2010, 2:09PM

The state-owned big 4 car manufacturers-FAW, Dongfeng/DFAC, Shanghai Auto/SAIC and Guangzhou Auto are real giants in the game than the small players like Chery, Geely or Greatwall, those small fishes are private and got less than 20 years experience.

FAW, first car factory in China, start biz in 1950s to build military trucks with the aid of Soviet. Now it builds VW, Audi and Toyota and commercial trucks of its own brand, and has capacity of 4 million cars p.a. it built 500k VW Jetta last year.

Dongfeng: 2nd largest car manufacturer in China, builds military trucks till now, produce and distributes Peugeot, NISSAN and honda. Capable of 2.5 million cars each year.

Shanghai Auto, 50 years history, formed JV with VW in 1984, GM in 1997, builds 2.5 million cars every year. Passat, Polo and GM Cruize are the best sellers on its list

Guangzhou Auto: grew in fast track from a restructured JV in 1998 to 1.5 million cars, mainly Honda and Toyota, Honda Accord and Camry consist the majority.

The notable part is the big 4 builds 90% cars in China, and not simple CKD manufacturers, min 75% to 95% parts source locally. It's mandatory requirement to build cars in China. Previously not economic viable, but at costs of Chinese customers, the supply chains seems competitive with overseas colleagues since 2002.

The striking points they have solid tech resources by producing military cars for 50 yrs and 30 yrs experience with global auto giants. least $10billion cash injected from stock market and government. The monopoly position allows them to make huge profit in China, and not interested to expand to overseas.

Commenter

Arisma

Location

Hong Kong

Date and time

May 02, 2010, 7:24PM

Is it just me or do some of these cars look like existing models of other manufacturers (ummm... Lexus RX, Mini?)

Commenter

arvin

Location

Melbourne

Date and time

May 03, 2010, 4:07PM

yeah to more choices of cars and i agree with Mr Wowtrousers it has to be have safety, quality and environmental standards are high.

Commenter

V__V

Date and time

May 03, 2010, 5:13PM

To: Mr Wowtrousers
"Let's face it, paying something like $20,000+ for a small car is insanity"

Honda Jazz/FIT automatic now sold in China and Hong Kong for only A$12,000 as standard, VW Polo sold at similar or lower price, why pay more to arrogant manufacturers who charge 30%+ more instantly to Aussies?

The Honda Jazz and Polo built in Guangzhou and Shanghai respectively have been shipped to European market for almost 10 years. The same price as in Asia.